A tax strategy that lets investors defer capital gains taxes by reinvesting sale proceeds into a like-kind replacement property within strict IRS timelines.

A mortgage with a fixed rate for an initial period (3, 5, 7, or 10 years), then adjusts periodically based on market rates. Can be lower upfront but carries future risk.

The process of paying off a loan through regular monthly payments. Early payments are mostly interest; over time, more goes toward principal as the balance decreases.

An opinion of value used by the lender to confirm the property is worth the loan amount. If it comes in low, you may renegotiate, bring cash, or walk away depending on terms.

The difference between the agreed purchase price and the appraised value when the appraisal comes in lower. The buyer must cover the gap in cash or renegotiate.

The increase in a property's value over time — driven by market demand, inflation, and location. Can be natural (market-driven) or forced (renovation-driven).

The estimated market value of a property after renovations are complete. Used by investors and lenders to evaluate value-add deals and determine maximum purchase price.

A sale where the seller is unwilling to make repairs or offer credits. The buyer accepts the property in its current condition — though inspection rights may still apply.

A short-term loan used to 'bridge' the gap between buying a new property and selling an existing one. Higher rates, short terms, typically 6–12 months.

Buy, Renovate, Rent, Refinance, Repeat. A strategy to recycle capital across multiple properties by pulling equity out through a cash-out refinance after stabilization.

A market condition where supply exceeds demand — many homes, fewer buyers. Buyers have more leverage: prices soften, sellers negotiate, and days on market increase.

Common Area Maintenance fees — charges passed to commercial tenants to cover shared spaces like parking lots, lobbies, and landscaping. Often reconciled annually.

Net Operating Income divided by property value. A quick measure of a property's return potential — as if you paid all cash. Used to compare investment properties.

Large, infrequent expenses for major repairs or replacements — roof, HVAC, plumbing. Smart investors set aside a CapEx reserve monthly so the big bill doesn't hit as a surprise.

What's left each month after collecting rent and paying all expenses — including the mortgage. Positive means the property pays you. Negative means you pay the property.

Replacing your existing mortgage with a larger one and taking the difference in cash. Used to access built-up equity without selling the property.

Fees and expenses paid at the end of a transaction — beyond the down payment. Typically 2–5% of the purchase price for buyers.

Recent sales of similar nearby properties used to estimate a home's market value. The foundation of pricing decisions for buyers, sellers, and appraisers.

You own your individual unit inside a larger building, and share ownership of common areas. Governed by an HOA. Lenders have specific requirements for condo financing.

A contract condition that must be met for the deal to move forward (financing, appraisal, inspection, sale of another home).

A standard mortgage not backed by a government agency. Requires stronger credit and typically 3–20% down. PMI applies below 20% but can be removed once equity is reached.

A seller's response to a buyer's offer that changes one or more terms — price, closing date, contingencies. Each counter resets the negotiation.

A number (300–850) that summarizes your creditworthiness. Lenders use it to decide whether you qualify and at what rate. Scores above 740 get the best terms.

The number of days a property has been listed without going under contract. High DOM can indicate overpricing, property issues, or a slower market — and creates buyer leverage.

A lender metric that compares a property's NOI to its annual mortgage payment. A DSCR above 1.25 means the property earns more than it costs to finance.

The legal document that officially transfers ownership of a property from one person to another. It must be signed, notarized, and recorded with the county.

A non-cash IRS deduction that lets investors write off the cost of a property over time — 27.5 years for residential. Reduces taxable income even while the property appreciates.

Upfront fees paid at closing to reduce your interest rate. One point = 1% of the loan amount. Whether it makes sense depends on how long you keep the loan.

The portion of the purchase price you pay upfront in cash. The rest is financed. Requirements vary by loan type — as low as 3% for some programs.

The percentage of your gross monthly income that goes toward debt payments. Lenders use it to decide how much you can borrow. Most conventional lenders prefer 43% or lower.

A defined window where the buyer investigates the property (inspections, disclosures, HOA docs) and can negotiate or terminate under the contract terms.

A residential building with two separate units, each with its own entrance. You can live in one and rent the other — a strategy called house hacking.

A good-faith deposit that shows the seller you're serious. It's usually held by an attorney or brokerage and credited at closing.

The portion of a property's value you actually own — the difference between what it's worth and what you owe. Grows through paydown, appreciation, and improvements.

A contract provision that automatically increases your offer by a set amount above competing offers, up to a maximum price. Used in competitive multi-offer situations.

A neutral third-party account that holds money and documents during a transaction until all conditions are met. Also used post-closing by lenders to collect taxes and insurance.

A government-backed mortgage that allows lower down payments (3.5%) and accepts lower credit scores. Requires mortgage insurance regardless of down payment size.

A home loan where the interest rate stays the same for the full loan term — typically 15 or 30 years. Your principal and interest payment never changes.

The legal process by which a lender takes possession of a property after the borrower stops making payments. Results in a forced sale to recover the loan balance.

A residential building with four separate units. The maximum number of units you can purchase with a residential mortgage — five or more requires commercial financing.

Purchase price divided by annual gross rent. A quick screen to compare rental property pricing. Lower GRM = more income relative to price. Doesn't account for expenses.

A commercial lease where the tenant pays one flat rent and the landlord covers operating expenses. Simpler for tenants, but landlords must accurately forecast their costs.

A short-term, asset-based loan from a private lender — used by investors to move fast on distressed properties. Based on property value, not the borrower's credit. High rates, short terms.

A Home Equity Line of Credit — a revolving credit line secured by your home's equity. Draw from it as needed during the draw period, repay during the repayment phase.

The most productive legal use of a property that is physically possible, financially feasible, and maximally profitable. A core concept in appraisal and investment analysis.

A Homeowners Association that may manage shared spaces, enforce rules, and collect dues. HOA rules and finances matter as much as the property itself.

Buying a multi-unit property, living in one unit, and renting out the others to offset or eliminate your housing costs. A low-barrier entry into real estate investing.

A contractually defined window after going under contract where the buyer can have the property inspected and, depending on terms, renegotiate or walk away.

The annual percentage the lender charges on your loan balance. Directly determines a major portion of your monthly payment and the total cost of borrowing.

A non-binding document that outlines proposed deal terms before a formal contract is drafted. Used to confirm mutual interest and key terms before investing in full due diligence.

A legal claim against a property for unpaid debt — from a contractor, tax authority, or judgment. Liens must be resolved before a clean sale can close.

The percentage of the property's value you're borrowing. An $80,000 loan on a $100,000 property = 80% LTV. Affects your rate, PMI requirements, and loan eligibility.

The price a property would likely sell for in a fair, open market between a willing buyer and seller. Determined by comps, not by what an owner thinks it's worth.

A property that combines residential and commercial uses — like retail on the ground floor and apartments above. Financing and zoning vary based on the use mix.

Multiple Listing Service — the shared database where agents list and search properties. Zillow, Redfin, and Realtor.com pull from the MLS. Agents work directly in the original.

When a seller receives more than one offer at the same time. Buyers must compete on price, terms, and strength of offer. Sellers often set a deadline for 'best and final' submissions.

A lease where tenants pay base rent plus some operating expenses. Single net adds taxes; double net adds insurance; triple net adds maintenance. More nets = more tenant responsibility.

Total rental income minus vacancy and operating expenses — before debt service. The foundation of any investment property analysis.

A property being sold without being publicly listed on the MLS. Found through agent networks, direct outreach, or investor channels. Less competition, but less transparency.

The ongoing costs to run a rental property — taxes, insurance, management, maintenance, repairs. Excludes mortgage payments. Used to calculate NOI.

Private Mortgage Insurance — required on conventional loans when you put down less than 20%. It protects the lender, not you. Can be removed once you reach 20% equity.

A lender's written statement that you qualify for a mortgage up to a certain amount, based on a review of your credit, income, and assets.

The day-to-day operation of a rental — finding tenants, collecting rent, handling maintenance. Can be self-managed or outsourced at 8–12% of gross rents.

A lender's commitment to hold a specific interest rate for a defined period — typically 30–60 days — while your loan processes. Protects against rate increases before closing.

Cash savings required by lenders (and smart buyers) beyond the down payment and closing costs. Demonstrates you can cover the mortgage during vacancies or emergencies.

Credits offered by the seller at closing to offset the buyer's closing costs. Negotiated in the contract. Lenders cap how much sellers can contribute based on loan type and LTV.

A market condition where demand exceeds supply — few homes, many buyers. Sellers hold the leverage: prices rise, contingencies get waived, and competition intensifies.

A sale where the property sells for less than what the owner owes, requiring lender approval. Can offer below-market pricing but involves longer, more uncertain timelines.

A standalone residential property on its own lot, designed for one household. The most common property type — and the most straightforward to buy, sell, and finance.

An additional HOA charge (often large) when reserves aren't enough to cover major repairs like roofs, elevators, or structural work.

Build-out work done to a commercial space to prepare it for a specific tenant — funded by the landlord, tenant, or both. TI allowances are often negotiated as part of the lease.

Legal ownership of a property. When you buy real estate, title transfers from the seller to you via deed, then gets recorded with the county.

Insurance that protects against past title defects — undisclosed liens, recording errors, or ownership disputes — that could affect your legal right to own the property.

A multi-story home that shares at least one wall with a neighbor. Owners typically hold their unit and a small outdoor space. Usually subject to an HOA.

A commercial lease where the tenant pays rent plus property taxes, insurance, and maintenance. Common in retail. Preferred by passive investors for predictable, low-management income.

The percentage of time a rental unit sits empty. Prudent underwriting builds in 5–10% vacancy even if the property is currently full. Optimistic vacancy assumptions are a common mistake.

Local government rules that define how land can be used — residential, commercial, industrial, mixed. Determines what you can legally build or operate on a property.